ISLAMABAD: President Dr Arif Alvi has approved amendments to the Companies Act 2017 to facilitate startups in Pakistan.
These amendments were proposed by the Securities and Exchange Commission of Pakistan (SECP) to help promote startups as well as attract local and international innovators.
The Companies Act, 2017, promulgated on May 31, 2017, was reviewed by the SECP in consultation with external and internal stakeholders who had proposals like improving protection of minority shareholders and removing anomalies in the provisions of the act.
The changes have been enacted through Companies (Amendment) Ordinance, 2020 promulgated on April 30.
Besides adding the definition of startups, employees' stock options and buyback of shares has been allowed for all companies, which was earlier allowed only for listed entities.
These amendments will help address the employee retention and reward issues and also facilitate startups in case a founding member needs to exit the company.
Requirement relating to the payment of subscription money within 30 days of incorporation by subscriber and filing of auditor certificate has also been done away to facilitate small companies.
Now a listed company may hold an extraordinary general meeting at a shorter notice with the approval of the commission. Further all entities are required to file annual returns with the registrar irrespective of paid-up capital and the CEO be appointed by the board of directors in all companies.
Further, the procedure for handling unclaimed dividends has been revised and the unpaid dividend account will now be maintained by companies and any markup accrued on it shall be used by them for corporate social responsibility initiatives.
A new provision has been inserted to enable review or revision of any order passed by the registrar, the SECP or any of its officer to improve the efficiency of the adjudication process.
Besides, provisions relating to mandatory requirements for common seal, real estate companies and inactive companies have also been omitted.
Published in Dawn, May 5th, 2020